News Details
CURTISS-WRIGHT REPORTS: SALES AND OPERATING INCOME UP 84% & 81%, RESPECTIVELY; BACKLOG & NEW ORDERS ARE AT RECORD LEVELS
April 30, 2003
ROSELAND, N.J., April 30 /PRNewswire-FirstCall/ -- Curtiss-Wright Corporation (NYSE: CW, CW.B) today announced financial results for the first quarter ended March 31, 2003. The highlights for the first quarter are as follows:
- Net sales increased 84% to $179,933,000 in the first quarter of this year from $97,787,000 in the first quarter of 2002. Acquisitions made in 2002 and 2003 contributed $75,318,000 to sales in the 2003 first quarter. Despite a difficult economic environment, sales from our base business rose 7% in the first quarter of 2003 over the comparable prior year period.
- Operating income in the first quarter of 2003 increased 81% to $23,345,000 from operating income of $12,914,000 in the prior year same period. Acquisitions made in 2002 and 2003 contributed $10,016,000 to operating income in the 2003 first quarter. Operating income from our base businesses increased 3% in the first quarter of 2003.
- Net earnings for the first quarter of 2003 were $14,122,000, or $1.36 per diluted share, a 52% increase from $9,316,000, or $0.90 per diluted share for the same quarter of 2002.
- New orders received in the first quarter of 2003 were $205,952,000, up 114% compared to the 2002 first quarter. Approximately 60% of the new orders received in 2003 were military related.
- Backlog increased 6% to a new record high of $509,279,000 from $478,494,000 at December 31, 2002.
The total sales increase of the 2003 first quarter over the 2002 first quarter was due to both increases in some of our base businesses and acquisitions. Higher sales of flow control products to the nuclear navy, the nuclear power generation, oil and gas, and European valve markets, higher sales from our domestic ground defense business, and higher shot peening services, all contributed to the growth in base businesses. Sales to the commercial aerospace OEM market, as expected, were down for the quarter. Excluding the contributions from the acquisitions consummated in 2002 and 2003, sales of the base businesses increased 7% in the first quarter of 2003 compared to the prior year period.
Curtiss-Wright's first quarter 2003 performance was highlighted by strong results from our operating segments. Increased business segment operating income in 2003 more than offset the decrease in the Company's 2002 nonoperating pension income. Operating income from our business segments increased $9,961,000 for the first quarter of 2003 as compared to last year's comparable period. The increase in operating income equates to improved earnings per diluted share of $0.63 for the first quarter of 2003 as compared to the prior year. The higher operating income is mainly due to the higher sales volume as described above.
Martin Benante, Chairman and Chief Executive Officer of Curtiss-Wright commented, "We are proud to report higher sales and operating income for the first quarter of 2003 over the same period last year despite challenges in some of the markets we serve. While sales have greatly benefited from our acquisition program, we have also seen strong performances in our base businesses with good internal growth in both sales and profits. Curtiss-Wright has experienced growth in 2002 and 2003 in markets where most companies have experienced major downturns, such as power generation, gas and oil processing and industrial markets. Curtiss-Wright has also experienced growth in our naval, military aerospace, land based military and laser peening markets. This growth reflects our customer's preference to purchase our highly engineered products and services. The commercial aerospace market has been particularly challenging, but our increase in military aerospace for the most part has offset the commercial downturn. Our diversification strategy is producing the balance of business that has allowed us to continue achieving profitable growth from our business segments during a weak economic cycle. Our recent acquisitions have achieved better than expected results while significantly increasing our market penetration, particularly within the defense industry, and also expanded our geographic reach and technological capabilities, giving us reason to remain optimistic about the rest of the year."
In addition, the projected increase in military procurement spending to the highest levels in over a decade should provide opportunities for us in the future. Our position on many defense programs is outstanding, with a mix of products for aerospace, land-based and naval defense platforms, which have never been stronger. This balanced blend of defense programs will provide both short and long-term benefits."
SEGMENT PERFORMANCE
Flow Control -- First quarter of 2003 sales for this segment were $93.3 million, up 210% over the comparable period last year. The higher sales reflect the acquisitions of the Electro-Mechanical Division of Westinghouse Government Services Company ("EMD") and TAPCO International, Inc. in the fourth quarter of 2002. In addition to the benefits from these acquisitions, we experienced sales growth of 23% in our base businesses, which was driven by stronger sales of products for both the traditional and non- traditional naval markets, gas and oil and commercial power generation markets, and higher valve sales to Europe.
Overall, operating income for this segment increased 292% for the first quarter of 2003 compared to the comparable prior year period. EMD posted strong results due to favorable sales mix and higher productivity. In addition to the benefit of acquisitions, increased operating profits from our base businesses contributed to the higher overall operating income. Operating income of our base businesses improved 39% from the prior year. Margin improvements on flow control products for commercial nuclear applications, European valve, gas and oil, and heavy truck markets, as well as overall cost reduction programs contributed to the favorable operating income performance.
Motion Control -- Sales for the first quarter of 2003 of $57.0 million increased 35% over last year due principally to the acquisitions of Collins Technologies in February 2003 and Penny & Giles and Autronics in April of 2002. The base business did experience lower sales due to the reduction in commercial aircraft production by Boeing and a slight drop in the European ground defense business. These lower sales were partially offset by stronger domestic ground defense sales primarily related to the expedited deliveries of the Bradley fighting vehicles and an increase in sales of military aerospace products for both OEM and spares. The business segment also benefited from favorable currency translation.
Operating margins for the first quarter of 2003 were down compared to last year. Lower margins were driven by lower sales volume as mentioned above, unfavorable sales mix, and higher than planned research development costs for our European ground defense business and a portion of our electronics business. The contributions from our acquisitions of $1.3 million partially offset these declines.
Metal Treatment -- Sales for the first quarter of 2003 of $29.6 million were 16% higher than the comparable period last year. The improvement was mainly due to higher sales of shot peening services, especially in Europe, which services the aerospace and automotive industries, and from the contributions from the 2002 and 2003 acquisitions. In addition, sales from our new laser technology also contributed to the higher sales for the quarter. Foreign exchange translation had a favorable impact on sales.
Operating income increased 36% for the first quarter of 2003 as compared to the first quarter of 2002. Higher sales volumes produced the higher operating margins. Margins for the quarter benefited from favorable currency translation of approximately $0.5 million.
Mr. Benante concluded, "We begin the year 2003 confident in our ability to build on our solid business foundation and generate long-term shareholder value by increasing sales and earnings. Although 2003 is likely to present a challenging business environment, the first quarter results illustrate our ability to increase shareholder value by executing our strategies and achieving our financial targets as we have indicated we would at the end of 2002. Our diversification strategy and ongoing emphasis on technology will continue to generate growth opportunities in each of our three business segments."
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The Company will hold a conference call with financial analysts to discuss the first quarter 2003 results at 10:00 a.m. Eastern Time, Thursday, May 1, 2003. A live webcast of the call can be heard on the Internet by visiting the company's website at curtisswright2014.q4web.com and clicking on the investor information page or by visiting other websites that provide links to corporate webcasts.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)
(Unaudited)
Three Months Ended
March 31, Change
2003 2002 $ %
Net sales $179,933 $97,787 $82,146 84.0%
Cost of sales 120,901 61,632 59,269 96.2%
Gross profit 59,032 34,782 22,877 63.3%
Research & development
costs 5,305 1,311 3,994 304.7%
Selling expenses 8,968 5,742 3,226 56.2%
General and
administrative
expenses 21,414 15,986 5,428 34.0%
Environmental
expenses 0 202 (202) -100.0%
Operating income 23,345 12,914 10,431 80.8%
Investment income, net 15 131 (116) -88.6%
Rental income, net 0 49 (49) -100.0%
Pension income, net 525 2,254 (1,729) -76.7%
Other expense, net (257) (108) (149) -138.0%
Interest expense (851) (193) (658) -340.9%
Earnings before
income taxes 22,777 15,047 7,730 51.4%
Provision for
income taxes 8,655 5,731 2,924 51.0%
Net earnings $14,122 $9,316 $4,806 51.6%
Basic earnings
per share $1.37 $0.92
Diluted earnings
per share $1.36 $0.90
Dividends per share $0.15 $0.15
Weighted average shares
outstanding:
Basic 10,282 10,123
Diluted 10,408 10,340
Certain prior year information has been reclassified to conform to
current presentation.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31, Change
2003 2002 $ %
Assets
Current Assets:
Cash and cash
equivalents $41,719 $47,717 $(5,998) -12.6%
Receivables, net 145,806 143,316 2,490 1.7%
Inventories, net 87,023 79,808 7,215 9.0%
Deferred income
taxes 21,341 21,840 (499) -2.3%
Other current
assets 8,652 9,005 (353) -3.9%
Total current
assets 304,541 301,686 2,855 0.9%
Property, plant and
equipment, at cost 368,142 354,990 13,152 3.7%
Less: accumulated
depreciation 141,615 135,941 5,674 4.2%
Property, plant
and equipment, net 226,527 219,049 7,478 3.4%
Prepaid pension costs 76,597 76,072 525 0.7%
Goodwill, net 195,607 181,101 14,506 8.0%
Other intangible
assets, net 19,356 21,982 (2,626) -11.9%
Other assets 12,734 13,034 (300) -2.3%
Total Assets $835,362 $812,924 $22,438 2.8%
Liabilities
Current Liabilities:
Short-term debt $32,874 $32,837 $37 0.1%
Accounts payable 44,251 41,344 2,907 7.0%
Accrued expenses 29,132 32,446 (3,314) -10.2%
Income taxes payable 8,203 4,528 3,675 81.2%
Other current
liabilities 52,341 53,294 (953) -1.8%
Total current
liabilities 166,801 164,449 2,352 1.4%
Long-term debt 123,045 119,041 4,004 3.4%
Deferred income taxes 8,429 6,605 1,824 27.6%
Accrued pension &
postretirement
benefit costs 78,616 77,438 1,178 1.5%
Long-term portion
of environmental
reserves 22,301 22,585 (284) -1.3%
Other liabilities 11,409 11,578 (169) -1.5%
Total Liabilities 410,601 401,696 8,905 2.2%
Stockholders' Equity
Common stock,
$1 par value 10,618 10,618 - N/A
Class B common stock,
$1 par value 4,382 4,382 - N/A
Capital surplus 52,290 52,200 90 0.2%
Retained earnings 520,876 508,298 12,578 2.5%
Unearned portion
of restricted stock (55) (60) 5 -8.3%
Accumulated other
comprehensive income 6,711 6,482 229 3.5%
594,822 581,920 12,902 2.2%
Less: Common
treasury stock,
at cost 170,061 170,692 (631) -0.4%
Total Stockholders'
Equity 424,761 411,228 13,533 3.3%
Total Liabilities
and Stockholders'
Equity $835,362 $812,924 $22,438 2.8%
Certain prior year information has been reclassified to conform to
current presentation.
Three Months Ended
March 31,
Change
2003 2002 $ %
Sales:
Flow Control $93,341 $ 30,118 $63,223 209.9%
Motion Control 57,040 42,252 14,788 35.0%
Metal Treatment 29,552 25,417 4,135 16.3%
Total Segments $179,933 $ 97,787 $ 82,146 84.0%
Operating Income:
Flow Control $14,318 $3,656 10,662 291.6%
Motion Control 5,090 6,782 (1,692) -24.9%
Metal Treatment 3,751 2,760 991 35.9%
Total Segments 23,159 13,198 9,961 75.5%
Corporate & Other 186 (284) 470 165.5%
Total Operating
Income $23,345 $ 12,914 $ 10,431 80.8%
Operating Margins:
Flow Control 15.3% 12.1%
Motion Control 8.9% 16.1%
Metal Treatment 12.7% 10.9%
Total
Curtiss-Wright 13.0% 13.2%
Curtiss-Wright Corporation is a diversified provider of highly engineered products and services to the Motion Control, Flow Control and Metal Treatment industries. The firm employs approximately 4,300 people. More information on Curtiss-Wright can be found on the Internet at curtisswright2014.q4web.com.
Forward-looking statements in this release related to expectations of continued high revenues continued sales and income growth, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in the need for additional machinery and equipment and/or in the cost for the expansion of the Corporation's operations; changes in government spending; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense, marine, and industrial companies. Please refer to the Company's SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.
SOURCE Curtiss-Wright Corporation
CONTACT:
Gary Benschip of Curtiss-Wright Corporation,
+1-973-597-4721,
[email protected]